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Valeant names new CFO in ongoing shake-up

Valeant Pharmaceuticals International Inc. has named Paul Herendeen, a former executive at Warner Chilcott P.L.C. and veterinary drugmaker Zoetis Inc., as its new chief financial officer, in an ongoing leadership shakeup sparked by an accounting scandal that has led to investigations by Congress, securities regulators, and federal prosecutors.

Valeant Pharmaceuticals International Inc. has named Paul Herendeen, a former executive at Warner Chilcott P.L.C. and veterinary drugmaker Zoetis Inc., as its new chief financial officer, in an ongoing leadership shakeup sparked by an accounting scandal that has led to investigations by Congress, securities regulators, and federal prosecutors.

Herendeen's appointment takes effect immediately. Valeant shares rose almost 9 percent Monday on the news, closing at $31.27. Its stock price has dropped more than 85 percent from its August 2015 high.

The drugmaker, which has about $31 billion in debt, is making key executive changes while attempting to recover from accounting and business-practices problems, and to restore investors' confidence.

It replaced chief executive officer Michael Pearson this year with Joseph Papa, who had been CEO of Perrigo Co. Two months after announcing the CEO change, Valeant appointed a new chief accounting officer. Other top executives have left, as well.

Based in Laval, Quebec, Valeant faces investigations from Congress, the U.S. Securities and Exchange Commission, and federal prosecutors. The company's U.S. headquarters are in Bridgewater, N.J.

Last week, T. Rowe Price Group Inc. sued Valeant, alleging that top executives artificially inflated revenue and profit through their use of Hatboro-based mail-order pharmacy Philidor Rx Services L.L.C., which is no longer in operation.

In the suit, T. Rowe Group claims Valeant refilled patients' prescriptions without their permission and steered them to more expensive drugs to boost sales and profits.

Valeant said last week that it has renegotiated its agreement with lenders, allowing it to miss some of its own forecasts without risking default.

Herendeen's appointment had been reported earlier by the Wall Street Journal.

His experience at Warner Chilcott may prove valuable, because that drugmaker was managing a heavy debt burden brought on by acquisitions, BTIG analyst Tim Chiang said.

"Paul knows this business model from a financial perspective," said Chiang. "By bringing in the right people at the exec level, I think the board's hope is that they can create a floor to this hole, that the company doesn't sink any deeper."

Robert L. Rosiello, who had been CFO, will remain at Valeant as executive vice president for corporate development and strategy, the company said in a statement.